Apple Inc plans to move some production of Macintosh computers to the US from China next year, chief executive Tim Cook said in remarks published on Thursday, in what could be an important test of the nascent comeback in US electronics manufacturing. Apple makes the majority of its products, from Macs to the iPhone and iPad, in China, the worlds factory floor for electronics. But like other US corporations, it has come under fire for relying on low-cost Asian labour and contributing to the decline of the US manufacturing sector. Cook did not say which Macintosh products will be produced in the US. But the effort is expected to go well beyond simple final assembly of devices, with Apple and unnamed partners building most or all of the components in the US as well.
The company will spend more than $100 million on the US manufacturing initiative, Cook said in an interview with Bloomberg Businessweek, published on Thursday. This doesn't mean that Apple will do it ourselves, but we'll be working with people and we'll be investing our money, Cook said. He told NBC's Rock Center programme, in an interview to be aired later Thursday, that only one of the existing Mac product lines would be manufactured exclusively in the US.
Apples decision, hailed by some analysts as an important first step even if it affected a tiny fraction of its overall output, was dismissed by others who saw it as an opportunistic public relations ploy with little effect on jobs. Some Apple suppliers were struggling to assess its impact. At the end of the day, Apple knows moving production to the US means lower profits for Apple, said a senior executive at Taiwan's Quanta Computer Inc who declined to be named because of the companies business relationship.
If Apple is really serious about moving production to the US, they would need to invest 10 times or even 100 times of that amount. We see only a minor impact on Apple suppliers.
Cross Research analyst Shannon Cross said it made sense for Apple to bring some manufacturing back to the US, because some components were already being produced there. Also, while cheaper labour costs have been a key factor in encouraging US manufacturers to move production to China, wages and other costs have risen sharply - particularly in the main coastal manufacturing centres. Labour costs, moreover, account for only a tiny portion of overall expenses: the research firm iSupply says the total cost, including labor, for final manufacturing of an iPhone 5 is just $8.
Experts estimate that the total base cost of all components that go into the gadget, or bill of materials, comes to around $200. Cross pointed to other potential benefits of US manufacturing, including mitigating the risk of intellectual property theft.
Cook has said in the past that he would like to see more of the company's products assembled back home, but declining US manufacturing expertise made that difficult. Apple makes applications processors for the iPad and iPhone via Samsung Electronics in Austin, Texas, and sources glass for the same devices from a Corning facility in Kentucky.